Growing Rental Market Has Strong Investment Opportunities; Creates Seller’s Market for Owners

March 7, 2012 - PRLog -- The downturn in the housing market in the greater Phoenix area has created an opportunity for those interested in real estate investments. Multifamily housing prices have been rising steadily over the past 12 to 18 months.
   "Multifamily property presently is the investment of choice," according to Les Litwin, principal in the Phoenix, Ariz.,-based Vestis Group. "It is a very well-managed risk with a high rate of return."
   The Vestis Group, a multifamily investment sales and advisory services firm, represents both sides of the apartment market. Principals Natan Jacobs and Les Litwin, along with a staff of dedicated professionals, offer services to both owners and investors.  Jacobs and Litwin started Vestis Group in 2008 to ensure that owners and investors receive the most efficient research marketing, real estate consultation and transaction services available.
   According to Litwin, multifamily housing is a stable investment class when compared to other options currently available.
   "The financial market is still fairly turbulent, and the economic recovery is choppy at best," he said. "Multifamily property, as an investment class, is an excellent alternative."
   The Phoenix area's job market fell five percent in 2008 and another seven percent in 2009. The single family housing market plummeted, creating an economic environment that many have thought will take years to fully recover. Homeowners have been underwater in their mortgages, while others have lost their homes due to foreclosure on mortgages they simply could not afford. Overbuilding in the single family market helped drive the downturn.
   However, according to market-research firm Reis, a strengthening job market, along with rent growth, is under way. Reis is forecasting more than 3.5 percent annual growth in rentals in the Phoenix market until 2015.
   While the great American dream of homeownership is still strong, the share of U.S. households owning homes has slid from 69 percent at its peak in 2004 to 67.2 percent in the first quarter of 2010, according to Barron's weekly magazine. The publication indicates the rate is likely to fall to its 1993-94 level of 64 percent by 2015.
   With the declining rate of homeownership comes the inverse effect: rising rental rate. Barron's stated in a July 26, 2010, article that rental rates likely will hit 36 percent by 2015 compared with 32.8 percent in 2004. An anticipated 7 million additional people could move into rentals over the next three years.
   With graduating college students leaving school holding an average of $23,300 in student debt in 2007-08 according to the publisher of FinAid, young people may see their ability to purchase a home inhibited for a longer period of time after graduation.
   With the burgeoning group of college graduates comes employment trends showing  higher growth in the 20- to 30-year-old group over the next five years. That age group rents apartments more than any other demographic, and the apartment market looks strong.
    Because lenders have much stricter guidelines for financing new construction, the lack of new construction is causing the demand for multifamily housing to increase much faster than the supply.  More and more people are seeing renting as a viable way to spend their housing dollars; the American dream of homeownership has lost some of its luster. As a result, the demand by both tenants and investors for apartment space has grown exponentially over the past two years. Would-be buyers' credit may have been seriously affected by delinquencies associated with previous homeownership,  and they may be forced in to renting housing for years to come.
   Inventory in the multifamily housing market for investors is at an all-time low, yet  demand is at record highs. With people wanting to invest in apartment buildings and occupancy rates hovering at about 92 percent in Phoenix (Marcus & Millichap Research Services, Reis, Inc.), complex owners are in the enviable position to ask top dollar should they decide to sell.
   Litwin called the multifamily product a "strong asset class" in Arizona.
   "There is a decreasing supply of rental units, and multifamily construction has been fairly dormant for the past five years," Litwin said. "There aren't many units coming on line this year, so we continue to absorb the existing supply. We (Vestis Group) are experiencing 95 percent occupancy in the more central, in-fill areas (of Phoenix) and are beginning to increase rents and burn off concessions. The prognosis is a continued increase in multifamily net incomes and vlaue over the next few years."
   While mortgage lenders continue to be reluctant to let go of funding for other than refinancing, the pace to finance income-producing properties is quickening. Tight credit standards remain in the secondary and tertiary markets for non-core assets -- except in the apartment sector, and competition is increasing among lenders in primary markets and for core assets (Multi Housing News Online). In addition to a stronger outlook for lending for income-producing real estate, investors are eager to find and purchase apartment buildings.
   Vestis prides itself on its ability to deliver added value to its clients by building uncompromising and long-lasting relationships with its partners. In the housing field, Vestis' Jacobs and Litwin have developed, built, improved, asset managed and sold thousands of apartments, condominiums, condo-conversions, homes and home-sites. Their mission is to ensure that owners and investors receive the most efficient research, marketing, real estate consultation and transaction services available.
   Vestis' foundation of its investment brokerage services is the depth of its local market knowledge. With the  focus on multifamily housing,  principals, resources, and expertise are concentrated on the apartment sector. This clarity of purpose and the synergy it creates makes the process of advising clients and facilitating transactions as efficient as possible while simultaneously maximizing value for its clients.
   Jacobs is principal and designated broker of Vestis group. He leads the brokerage and day-to-day operations, which include financial and operating analyses, sales and marketing, investor relations and business development. During the course of his career, Jacobs has sold a variety of types of transactions including apartments, condominium conversions, industrial, retail, land, investments, portfolio sales  and the sale of more than 4,200 units of multi-family housing throughout Arizona and Texas, totaling over $213 million.    
   Jacobs has been instrumental in developing and building three residential subdivisions including 42 single family homes. Jacobs holds an Arizona Real Estate Broker's license. His expertise includes Brokerage, Asset Management, Market Analysis, Investments, Redevelopment, New Development, Construction Management and Consulting.
   The second principal, Litwin oversees the company’s asset portfolio and spearheads the business development operations including acquisition, investment analysis, financing, project management and client relations. In 2009, Litwin was instrumental in the successful repositioning of 19 REO apartment communities, representing over 2,000-units, in less than 12 months.
   He currently oversees the asset-management of  seven apartment communities in the Phoenix Metro, representing approximately 805 units. Litwin underwrites every property considered for acquisition or marketing and has contributed to deals totaling over $200 million, including personal investments. Litwin holds an Arizona Real Estate Salesperson’s License. His expertise includes Brokerage, Asset Management, Market Analysis, Investments, Redevelopment, New Development, Construction Management and Consulting.
   Vestis Group is located at 2375 E. Camelback Rd., Suite 600, in Phoenix, Ariz. Call (602) 387-5330, or visit the Website, www.vestis-group.com for more information…